Zhang's High

My friends don't tend to collect art, but it seems that their friends do. Yesterday afternoon, I found out that a friend of a friend had sold his Zhang Xiaogang at Sotheby's for $400,000; and then yesterday evening I found out that a friend of an entirely different friend had sold his Zhang Xiaogang at Sotheby's, too, for $1 million. Both sales fell well short of the $3.1 million that "Chapter of a New Century -- Birth of the People's Republic of China" managed to fetch, but I can tell you that the $400,000 painting is just 15 3/4 by 11 3/4 inches, or about the size of two pieces of standard letter paper. I can also tell you that it was bought for $7,000 about 10 years ago, which gives it an annualized rate of return of 50%, more or less.

As for the $1 million painting, it was bought for about $15,000, and then, a few years ago, its owner moved cities. Not wanting the hassle of transporting the canvas, he tried to sell it back to the gallery for the same price he paid for it – and the gallery refused.

I can say with some confidence, then, that these paintings were not bought with speculative intent. But a lot of Chinese collectors now want to repatriate their country's patrimony, especially with regard to important artists of the 1990s such as Zhang. And they way they can do that is by bidding up his values to a level at which the paintings can get shaken loose from the grasp of collectors who happened to be in the right place at the right time and got lucky.

It might make sense to consider the market in Zhang to be a bubble: certainly his price appreciation would seem to be unsustainable. On the other hand, he's certainly an important Chinese artist, and with art it can be very difficult to know exactly who and where owners of important works are. Often the only way to get them to reveal themselves is to bid up the market for those works until the prices are so silly that the original buyers consign their pieces for sale.